In an effort to simplify and streamline the annual return/report and to reduce the reporting burden on filers, the agencies have developed one Form 5500 for use by both "large plan" filers (plans that previously filed the Form 5500) and "small plan" filers (plans that previously were eligible to file the Form 5500- C/R). The new form is intended to:

• Reduce the total amount of information required to be reported for many plans by eliminating information that is not useful to accomplish enforcement, research, or other statutorily mandated missions;

• Provide plans using simple tax qualification structures and financial operations with correspondingly streamlined annual reporting requirements;

• Allow large and small pension plan filers to report information on coverage requirements for qualified plans in accordance with the three-year testing cycle permitted under Rev. Proc. 93-42, 1993-2 C.B. 540;

• Target reporting requirements so that welfare plans generally complete fewer items than pension plans, and small plans complete fewer items than large plans;

• Establish the Form 5500 as the standardized reporting format for all so-called "direct filing entities"-- common/collective trusts, pooled separate accounts, master trusts, 103-12 investment entities, and group insurance arrangements;

• Eliminate redundant items and improve questions that historically produced frequent technical filing errors; and

• Reduce government and filer costs associated with filing, receiving and processing annual reports, speed government processing, and enable plans and their service providers to establish more streamlined record keeping and filing support systems.

The Pension Benefit Guaranty Corporation (PBGC) announced today that with the enforcement tools provided by recent law to keep pension plans better funded, the annual list of 50 companies with the largest pension underfunding is no longer needed.

"With full implementation of the Retirement Protection Act reforms we now have better enforcement tools in place. Especially important is the requirement that companies with severely underfunded pension plans annually report the underfunding to workers and retirees," said PBGC Executive Director David Strauss.

Many flexible benefits plan sponsors tout their program as the ultimate in choice -- and there's no question that they're right. But other flex plan managers are taking their plans to the next level and augmenting them with lifecycle accounts, first developed in 1993 for Xerox Corp. (Stamford, Conn.) by The Segal Co., the consulting firm headquartered in Boston.

Lifecycle accounts establish a fixed dollar amount available to employees for a variety of benefits from which the employees can draw as their need for that benefit arises. Unlike many cafeteria plan options, these benefits are taxable to the employee and require no discrimination testing or ERISA disclosure requirements (readers are cautioned to check with legal counsel before adopting a plan), are easy to administer, and allow for considerable creativity in designing applications that the companies' employees consider valuable.

In an effort to control plan costs, small 401(k) plans are becoming much more aggressive about changing service providers and renegotiating fees, an exclusive survey by IOMA reveals. Their new attitude makes sense. This portion of the market represents the fastest growing segment and is therefore attracting a slew of service providers anxious to serve it. The good news is that 401(k) plan managers are taking advantage of this market trend to obtain the best plan for the least cost for their company and its employees.

The extent to which small sponsors (those with less than 100 participants) are changing their recordkeepers, investment managers and consultants is underscored by analyzing data from both IOMAs 1996 and 1997 "Controlling 401(k) Plan Costs and Salary Survey."

In 1996, our numbers show, only 18.5% of small sponsors labeled this as one of their five most successful ways to control costs. In 1997, 38.6% did (see table on page 6 and 7). This year, 360 plan sponsors participated in our poll.

Meanwhile, midsize plan sponsors with 100 to 999 participants were less inclined to change providers this year than last (25.6% versus 44.7%). Larger sponsors, meanwhile, remained active on this cost control front (see table).

Of equal import, small plan sponsors were much more inclined (31.4%) to renegotiate service provider fees. This approach -- used with great affect by large plan sponsors for the past few years -- shows the building confidence and savvy of smaller plan sponsors in managing their plans.

In Q&A 44, we dealt with the following reader question: "I thought that, if a 401(k) plan failed the ADP test, it only disqualified the CODA and not the entire plan. Since APRSC, SVP and VCR are available only to correct plan disqualification defects, how can these remedial programs be used for an ADP failure?" In Q&A 44, we discussed the fact that an ADP failure can be corrected under IRS remedial correction programs, including SVP, VCR and APRSC. In this Q&A, we discuss the timing of correction under APRSC.

Washington, D.C., August 29 - The Pension Benefit Guaranty Corporation's decision to reexamine the value of its controversial annual list of the alleged 50 worst-funded company pension plans is a major step toward rebuilding a positive relationship between the agency and business clients, said Mark J. Ugoretz, President of The ERISA Industry Committee (ERIC). ERIC is a trade association representing over 130 major employers who sponsor defined benefit pension plans and pay the lion's share of PBGC premiums. A decision on whether to eliminate the list is expected next month, according to an agency official.

BENJAMIN W. LEWIS, a retired orthodontist living in Greenville, S.C., has just been through an ordeal. Lewis, 68, has a very large IRA and wanted to set up what is known informally as a stretchout IRA for his children. Doing so will give his heirs the right to enjoy decades of tax-deferred compounding on whatever is in the account when he dies.

But he had a devil of a time finding a sponsor who would let him do it. "It was so frustrating,'' says Lewis. "I talked to five mutual funds and none of them knew about it. Thank goodness I'm retired and have a speakerphone, so I can stay on hold forever and do other things."

After a half-dozen calls to Fidelity over a year, "I found somebody who agreed it was possible," he says. So Lewis put the account there even though Fidelity is making him keep all his heirs on one account rather than letting him split it up into four pieces, which he had hoped to do.

In his ordeal Lewis has plenty of company. Until a caller pointed out her mistake, a T. Rowe Price attorney misunderstood a key rule governing stretchout IRAs. Vanguard's legal department assured a reporter that it allowed stretchout IRAs, but then a customer service rep told another caller she had never heard of them. Two spokesmen for the Strong fund family said that Strong didn't allow them at all, although one of them later hedged.

With IRA distributions, the wages of sin are steep. "One little mistake can cause a tax disaster," says Michel Kaplan, a lawyer with Sherrard & Roe in Nashville.

Terrifying Example Number One: A young man in Tennessee recently inherited a $1.5 million IRA from his widowed mother. She had arranged things so that after her death, he could keep the IRA's tax-deferral going another 51 years. But he missed the deadline for the first annual withdrawal of $25,000. Result: unless the irs has mercy on him-which is unlikely-the IRA will expire in 5 years, not 51. That's a lot of tax-free growth to give up.